Kinetic Trader

Stock Trading Lesson – Don’t Get Lazy

The title of this post pretty much sums up this rule of stock trading or any trading. Lets say you have spent many hours and years developing your investing or trading knowledge and learned many of the hard trading lessons by losing money (hopefully learning and correcting from your mistakes).

You finally feel like you have a good grasp on reading the market(or at least improving) so that you are outperforming the market and you are now doing well with your positions breaking out and acting correctly according to your research/plan.

Your profits are really growing and you start slacking……like stop building your watch list of stocks, stop screening thru your holdings every night to see any concerns showing up in the charts, you get lazy about watching the market internals for any signs of a change in trend(like negative divergence/weakening ), etc…..

It is so important to not get lazy when you are doing well. So many investors become lethargic when they are doing well and only start worrying when they are losing money. You have to keep up with your plan and following your exit strategies exactly. If you hit your price target then sell, if a stock is weakening that you own then sell it.

If the market is showing signs of weakening then dont ignore that just because your stocks haven’t weakening yet. Remember that most stock follow the market and the best traders/investors know that best traders buy and sell before it is obvious to everyone else. The smart money is selling into strength not selling after the market has corrected and it is obvious to everyone else.

If you are ignoring the market weakness in the last week here(Jan 2010) thinking it’s just some people taking profits after the market has made such a huge run, then you haven’t learned much from this article………because the warning signs are loud and clear. Proceed with caution and DONT GET LAZY.

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